Missing child maintenance payments to impact on credit rating for the first time

In the UK, more than £3 billion pounds* is owed in unpaid child maintenance payments and the government wants to encourage more absent parents to start supporting their children financially.

They propose that from March 2015, absent parents who fail to pay child maintenance could risk damaging their credit rating. This could result in them being turned down for mortgages, credit cards, loans and mobile phone contracts or having to pay a higher interest rate on any borrowing.

On announcing the change, pensions minister Steve Webb said:

"For too long, a minority of absent parents have got away with failing to pay maintenance, leaving families without that financial support. I would hope that we see this power used very little, because the deterrent effect of a possible negative mark on a person's credit rating will convince those who have previously failed to pay towards their children's upbringing to do the right thing."

Under the new plans, the payment records of those in arrears could be shared with the credit agencies lenders use when determining whether to give someone credit. It is thought that this will only affect those who have fallen so far behind with payments that a court has granted ‘liability orders’.

Those parents who always make their child maintenance payments on time could ask for their records to be shared with the credit agencies as it may have a positive impact on their credit rating.

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